New Hampshire: The Real Facts

Andrew Cline writes in the National Review what the new Democratic Party majority in Concord has done to the state of New Hampshire:

In the 2006 election, New Hampshire voters did what they had not done since 1874, the year Republicans were routed nationally because of scandal and an immensely unpopular Reconstruction agenda: They handed Democrats control of every elected branch of state government. Now they are paying the price — literally. The orgy of taxing, spending, and regulating in which Democrats have indulged is threatening New Hampshire's status as the New England state most hospitable to business and individual liberty.

Immediately after taking control in January 2007, the Democratic majority began working toward a massive increase in state spending. Popular Democratic governor John Lynch proposed a huge new budget, and the legislature larded it up with even more spending. That summer, the legislature passed, and Governor Lynch signed, a $10.3 billion budget — the first New Hampshire budget to cross the $10 billion mark. Its 17.5 percent increase in state-general-fund spending, the largest in two decades, was financed with more than $100 million in tax and fee increases, including a 28-cent-per-pack cigarette-tax hike, as well as higher car- and deed-registration fees, court filing fees — even turkey-hunting license fees.

The previous state budget, passed by a Republican legislature under the same Democratic governor, had grown by only 2.28 percent over its predecessor — one of the reasons Lynch had become so popular. But without a Republican legislature in opposition, he was free to let his hair down a little. And he did, on budgetary and other issues.

Even with the massive tax increase, the $475 million in new spending was not fully funded. Legislators took care of that by simply assuming that there would be healthy increases in revenue, despite economic data that predicted a slowing economy and, therefore, declining revenue. Even before the budget was passed last summer, Republicans predicted that it would be more than $100 million out of balance by the end of the biennium in 2009.

Guess what? Department heads now predict a budget shortfall of about $140 million.

The governor got legislators to cut $50 million from this year's spending — targeting some of the same programs and policies (health and human services, land conservation) that Democrats had relentlessly attacked Republicans for trimming in 2006 and 2004. The Democrats are deferring the remaining $90 million (at least) in needed cuts until the second year of the biennium — which is to say, until after this fall's elections.

There is good reason to suspect that, instead of cutting spending, they will raise taxes again. Governor Lynch began the year (an election year, remember) by pledging to oppose any new spending. He refused, however, to oppose tax increases or new taxes. When asked twice on a popular public-radio talk show whether he would oppose new or increased taxes, he dodged the question both times.

The tax hikes and the laughable justifications for them continue. The very first bill approved this January was a new tax on sellers of animal vaccines. It was labeled a fee and passed under the pretense that the state veterinarian needed new revenue to cover the cost of animal-vaccine licensing. But New Hampshire does not license animal vaccines; the FDA does. The state merely processes some paperwork for about 50 vaccines a year. And not a dime of the 'fee' was directed to the state veterinarian's office. The bill put all the new money into the state's spay-and-neuter program.

Next, legislators attempted to pass a tax on bottled beverages and label it a fee as well. This 'fee' would have provided no service to consumers, but instead would have funded environmental programs, including startup grants for 'green' companies. It was approved 15–2 in committee, but opponents were able to stop it in the state house of representatives.

Sensible Democrats did manage to kill the worst new tax proposed since their takeover. They nixed a proposal — by a British-born Democratic legislator, no less — to mandate that all candy sold in New Hampshire bear a tax stamp. Yes, the bill would have created colonial-style stamps that merchants would have had to stick on every piece of candy, in order to prove they'd paid the tax on it.

It's also true that, thanks to pressure from Lynch, legislators have not been as energetic in their pursuit of tax and spending hikes since January as they were in 2007. But after just one year with Democrats running the state, New Hampshire is operating with an unbalanced budget that spends nearly half a billion more than the previous one, and the state's residents are facing the real possibility of tax increases as large as the ones passed last summer.

The new Democratic majority has also begun crusading against personal behavior it dislikes. Last year, the legislature banned smoking in bars and restaurants statewide. The state's motto is 'Live Free or Die,' but Democratic lawmakers believe they have a mandate to interfere with personal behavior they find objectionable. The tough-on-smoking theme is a recurring one. A bill is moving through the legislature to redefine cigarillos as cigarettes. They are actually small cigars, but the state taxes cigarettes at a much higher rate.

And as recently as February, New Hampshire's house of representatives appeared to be on the verge of putting all the state's cigar shops out of business, with a plan to place a 60 percent tax on cigars — double the 30 percent tax imposed in Massachusetts. (The bill was referred to interim study after cigar-shop owners and the New Hampshire Union Leader's editorial page pointed out that the tax, which would have applied to all inventory and not only to cigars sold, would have cost some cigar shops tens of thousands of dollars the day it went into effect, putting many of them, if not all, out of business.)

Democratic legislators' attempts to kill another industry were more successful: They passed a bill that will effectively kick payday lenders out of the state next year. The payday-lending industry had boomed in New Hampshire in the past few years, and not a single complaint had been lodged with the banking commission against any payday lender. Nonetheless, Concord decided it had to 'protect' the citizenry, and placed a 36 percent cap on the interest rates charged on short-term loans. When that cap takes effect, a payday lender will be able to charge no more than $1.38 on a typical two-week loan of $100, instead of the $20 now charged. Some lenders have said they will continue to operate until the law goes into effect. After that, with their profits legislated away, they will leave the state.

So now, in the 'Live Free or Die' state, you can no longer smoke in a bar or offer a short-term loan at market-determined interest rates. Nor can you ride a bicycle without a helmet if you are younger than 16. You can still drive a car without buckling up, and ride a motorcycle without a helmet — for now. A mandatory-seatbelt bill was passed by the New Hampshire house but defeated in the senate. And — thanks to 'Bike Week' in the city of Laconia, an annual tourist draw — legislators have yet to dare mandating the use of motorcycle helmets.

Last year, Granite Staters nearly lost the ability to release helium balloons at parties or other celebrations. A bill to ban the release of more than one balloon was defeated only after it was widely ridiculed as an example of the majority's zeal for prohibiting any behavior of which it disapproves.

Democrats would also force the Granite State to reduce its consumption of electricity. Bills making their way through the legislature this session include a ban on the sale of any light bulb that is not energy-efficient, and a mandate that landlords allow tenants to hang their laundry out to dry (no electricity needed). The governor also wants the state to join the Regional Greenhouse Gas Initiative, in order to reduce carbon-dioxide emissions — even though this would significantly raise power rates at a time when high home-heating-oil prices are prompting people to use more electricity.

But those 15-year-olds who cannot ride a bicycle without guidance from the state may now have an abortion without oversight from their parents — and those parents may now be part of a same-sex couple: The Democrats passed a civil-unions law and repealed the state's parental-notification law. And a bill proposed this year would mandate that health insurers cover hormone treatments for transsexuals.

During their last few years in power, New Hampshire Republicans became a flabby self-parody, simply spouting anti-tax slogans instead of governing as effectively as they could have. But by punishing Republicans, New Hampshire voters have punished themselves with higher taxes, a weaker business environment, and more restrictions on personal freedom. If they wanted to send a message to Republican politicians, e-mail would have been a lot cheaper.

Mr. Cline is editorial-page editor of the New Hampshire Union Leader.